Daybreak Oil and Gas Starts 5 Well Re-entry Program

Daybreak Oil and Gas has signed a Letter of Intent with Oracle
Operating Co., LLC. of Dallas, Texas to participate in the re-entry of a well in the Saxet Deep Field. The project is located on a 320 acre lease within the city limits of Corpus Christi, Texas. The well, Socony Mobil 8 Weil "C" will
be re-entered to test a Frio sand at 7,022 feet. This zone exhibits
approximately 15 feet of hydrocarbon pay believed to be primarily natural gas.
Daybreak will have a 20% working interest subject to a 75% net revenue
interest.

In addition to the initial interval to be re-completed, there are numerous
shallower zones up to 6100 feet that exhibit hydrocarbons on the well logs.
Based upon a review of off-setting well logs and production records none of
these zones are believed to have previously produced gas or oil. There are
four additional existing well bores within the Area of Mutual interest that
can be re-entered by Daybreak and its partners. In addition to normal State
workover permits, a Federal Aviation Agency (FAA) approval is also required.

Extensive infrastructure is in place to produce the natural gas expected
to be encountered. The initial well already has pipeline in place. The Saxet
Deep field has previously been produced primarily as an oil field and some of
the gas sands have been neglected.

Robert Martin, President of Daybreak believes the Saxet re-entry project
to be a relatively low cost and high reward prospect. Geological risk is
minimal and engineering risk is moderate.

Daybreak announced it has also acquired the necessary drilling permits for
their Tuscaloosa Sands project in Louisiana. A drilling company has been
engaged and drilling is expected to commence on the first well within the next
few weeks.

Drilling on the Ginny, South project on the Gulf Coast of Texas has now
been underway for several days. The surface casing has now been put in place
on the Curlee #1 well. Drilling depth has exceeded 1000 feet. The target depth
on this well is 9,550 feet.